First Multi-Unit property... feeling excited and anxious

[Theresa Sanford]

I have been learning on Bigger Pockets for the past month and I am so grateful to everyone here who contributes to this site.

My husband and I bought a SFR in Gilbert, AZ in 2010 which we have paid off. It rents for $1000/month.

We are now looking at 3 duplexes, total of 6 units in Winslow, AZ. The seller was asking $220,000 we offered $210,000. This comes out to ~$49 sq/ft which appeared to be average looking at other multi-unit properties that have sold in the area. We have a property manager who lives in the area. Winslow is a small town, but looking on Craigslist there are not many properties available for rent and none in this price range. We are going to put new paint/flooring in the 3 units and rent them for $525/mo.

Units are currently rented for $475/month and 3 units are occupied. We have hired an inspector to review the property which was built in 1949. Most of the appliances, water heaters and swamp coolers are newer. Most of the plumbing and electrical has been replaced/updated. We are planning on having the sewer lines inspected.

I hope I did not leave anything out, or confuse everyone with too much info. Please let me know if there is something else we should be considering with this property. The cap rate looked a little high on this... not sure if I plugged a number in wrong somewhere.

Here are the numbers:

MULTI FAMILY CASHFLOW ANALYZER

Rent per unit $475.00

# of units 6

Annualized rental income $34,200.00

Sales price $210,000.00

Down $66,000.00 32%

less percentage Repairs $10,000.00

Total Investment $76,000.00

Loan $144,000.00

4.10%Interest

25 year Amortization

Payment $768.06 per month

Vacancy $3,420.00 10%

RE Taxes $950.00

Insurance $2,000.00

Management $3,420.00 10%

Maintenance $1,710.00 5%

Utilities/HOA $5,076.00

Reserves $1,710.00 5%

Operating Expenses $18,286.00 59%

Net Operating Income $15,914.00

less Annual Debt Service$9,216.70

Cashflow $6,697.30

Cap rate20.9%

Monthly cashflow $558.11

CCR (%)8.81%